While foreign universities can provide valuable education, they can also come with high tuition and living expenses. To make the payment for a foreign education easier, many Indian banks, including Canara Bank, offer education loans to eligible Indian students.
Read on to learn more about education loans available from Canara Bank, how much they cost, and what you need to know before you apply.
| 📝 Your Complete Guide to Canara Bank Study Abroad Loans |
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Canara Bank in India offers two kinds of education loans for Indian students looking to go abroad for higher education:
This scheme is available for Indian students who are accepted for a master's degree in a STEM program at select high-ranking universities abroad.¹
Loan Amount Available
Under this scheme, the minimum loan amount is INR 7.50 lakh. There is no ceiling on the maximum amount as long as the applicant is able to provide a collateral security that is 100% of the loan amount or above. For collateral coverage less than 100%, the maximum loan available is INR 100 lakh.
Collateral Security
Collateral valued at a minimum of 50% of the loan amount is required to apply under this scheme. This requirement can be supported by the assignment of the applicant's income from future employment after graduation.
Loan Processing charges
Margin Payment
The borrower must be able to provide 10% of the loan amount to apply for the education loan under this scheme.
Interest Rates
Canara Bank Study Abroad Loan interest rates are linked to the bank's Repo-Linked Lending Rate (RLLR). As of May 5, 2023, the RLLR of Canara Bank is 9.25%.²
Added to the RLLR is a credit risk premium percentage credit risk premium which depends on how much collateral, or security, you put down for the loan.
| Collateral security as a percentage of the loan | RLLR | Credit Risk Premium | Effective Interest Rate |
|---|---|---|---|
| 100% and above | 9.25% | 1.60% | 10.85% |
| 75% to 100% | 9.25% | 1.85% | 11.10% |
| 50% to 75% | 9.25% | 2.10% | 11.35% |
Rates retrieved on May 22, 2023. Please verify the latest rates from the Canara Bank website.
So if you provide more collateral, your effective interest rate will be less.
This scheme offers need-based finance for Indian students seeking a graduate or postgraduate degree abroad (and in India as well). It requires collateral security based on the size of the loan. Loans for higher studies abroad that are more than INR 7.50 lakhs must be secured by 100% collateral.²
Margin Payment:
Under the IBA Model Scheme, there is no margin requirement for loans of up to INR 4 lakhs. For a loan amount above INR 4 lakhs, a margin payment of 15% of the loan is required.
Interest Rates
For the IBA Model Education Loan Scheme, the interest rate you will pay is linked to the loan amount. Loans for higher studies abroad that are more than INR 7.50 lakhs must be secured by 100% collateral.
| Loan Amount | RLLR | Credit Risk Premium | Effective Interest Rate |
|---|---|---|---|
| Up to INR 7.50 lakhs | 9.25% | 2.00% | 11.25% |
| Above INR 7.50 lakhs | 9.25% | 1.60% | 10.85% |
Rates retrieved on May 22, 2023. Please verify the latest rates from the Canara Bank website.
| 💸 Income Tax Benefit |
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| Under Section 80E of the Income Tax Act³, borrowers can claim deductions on their income taxes for the interest charged on their education loans. The deduction can only be claimed for the interest paid in the year the income tax is filed. |
Typically you won't have to start repaying your loan until after the moratorium period, which is your course period plus a maximum of one year. After that, you will need to start making payments towards your loan. The maximum repayment period is 15 years for both loan schemes.¹
| 💡 What is a moratorium? |
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| For an education loan, a moratorium is a grace period when you won't need to make payments toward your principal or interest. This period typically spans the duration of your studies and can extend for an additional time after graduation. Once the moratorium is up, you will have to start making payments to the bank for your loan. |
Once you have received admission, ensure all the required documents are ready when submitting an application for the Canara Bank Study Loan Abroad.
Here are the documents needed when applying for a Canara Bank Study Abroad Loan:
New customers must complete the KYC formalities and open a Canara Bank savings account before applying for a Canara Bank Study Loan Abroad. Existing Canara Bank account holders will not need to go through the KYC process.
Besides the KYC documents like address and identity proof, the student borrower must submit their educational credentials from Standard X onwards. It includes mark sheets, degrees, certificates, and any relevant diplomas.
The admission letter detailing the admission confirmation to the respective university abroad and the course details and fee structure. This letter should also include the disbursement schedule.
Details of the collateral security.
Financial credentials of parents or guardians, as required.
Canara Bank holds the right to ask for additional documents as needed.
Students can also visit the nearest Canara Bank branch and complete the education loan application with the branch's Credit Manager. You can contact your nearest Canara Bank branch.⁵
| 📞 Canara Bank Contact Phone Numbers | |
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Customers in India can contact the following toll-free numbers to know more about Canara Bank Study Abroad Loan:
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Once your loan is approved, an important part is receiving the loan funds. Canara Bank follows a specified loan disbursal process for its education loan schemes:
The loan money for tuition is sent annually to the university abroad where you are enrolled. As a borrower, you must provide the bank with the disbursement schedule ahead of time.
If you need to be reimbursed, you must provide the original tuition or other expense receipts, and the bank will reimburse the amount to your bank account.
The living expenses for the Canara Bank Study Abroad Loan are credited to the student's bank account. The bank offers a travel card that can be refilled with foreign currency that students can use.
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Please see the Terms and Conditions for your region and visit our pricing page for the most up-to-date pricing and fee information on Wise products.
Sources used for this article:
Sources verified on May 22, 2023.
Cover photo by Yash Parashar on Unsplash.
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